Both of Canada’s major railways announced third quarter results for the period ended September 30. Although both carriers put in admirable performances, their results appear to point to a weakening economy.

During the quarter, CN’s revenues increased by 7 per cent to $3.22 billion. Operating expenses as a percentage of revenues increased from 53.3 per cent to 54.7 per cent. Cash flow from operations declined to $1.41 billion from $1.48 billion. However, “free” cash flow, the amount remaining from operating cash flow after subtracting net investments made during the quarter and dividends paid to investors, increased to $373 million from $310 million. During the first nine months of the year, “free” cash flow increased to $1.44 billion from $923 million. From Jan 1 to Sept 30, CN spent $1.543 billion repurchasing its own shares, and paid $932 million in dividends. As of September 30, the company’s equity stood at $15.1 billion (as compared to $14.8 billion as at December 31, 2016), while total debt declined to $22.0 billion from $22.2 billion (Dec 31, 2016). During the quarter, CN’s operating ratio slipped from 53.3 per cent to 54.7 per cent.

During the quarter, CP’s revenues increased by 3 per cent to $1.595 billion. Operating expenses increased marginally from $897 million to $905 million. However, as a percentage of revenues, operating expenses declined from 57.7 to 56.7 per cent. Net income rose significantly from $347 million to $510 million. However, the increase was mainly due to significant foreign exchange gains on long term debt. Cash flow from operations declined from $591 million to $527 million, and “free” cash flow of $138 million fell far short of the $238 million recorded for the third quarter of 2016. Primarily as a result of reigning in the company’s share repurchases in 2017, CP’s balance sheet has improved considerably. The company’s equity increased to $5.56 billion as at September 30 (from $4.63 billion as at December 31, 2016), while total debt decreased to $13.9 billion (from $14.6 billion). During the quarter, CP’s operating ratio improved from 57.7 per cent to 56.7.

For CN, the bright spots were metals and minerals, and coal. Although freight revenues per revenue tonne mile (RTM) was down by 13 per cent for both categories, revenue tonne miles were up by 50 and 40 per cent respectively. Intermodal revenues, CN’s most important revenue category, were up by 12 per cent. Other revenue categories held their own.

For CP, the bright spots were potash, and metals, minerals and consumer products, which registered a 32 per cent increase in freight revenues. Potash registered CP’s largest increase in freight revenue per revenue tonne mile (14 per cent). Energy, chemicals and plastics recorded impressive gains in freight revenues, but also represented CP’s freight category that suffered the most significant drops in freight revenue per RTM. Intermodal, CP’s most important revenue generator, generated revenues of $341 million, down by 2 per cent over 2016.

At CN, efficiency indicators represented a mixed bag. Rail freight revenue per RTM was down by 2.9 per cent, and rail freight revenue per carload was down by 3.8 per cent. Terminal dwell time was up significantly, and train velocity was down. However, other indicators were up. For example, operating expenses per gross tonne mile (GTM) were down by 1.9 per cent, labour and fringe benefits per GTM gross tonne miles were down by 6.4 per cent.

At CP, published efficiency indicators were ambiguous. However, CP did manage to limit its loss of rail freight revenue per RTM to 1.1 per cent, and managed to maintain its revenue per carload at 2016 levels. CP improved terminal dwell time from 7.0 to 6.6 hours.

At CN, total number of employees on September 30, 2017, was 23,428, an increase of 5.7 per cent compared to September 30 of 2016. At CP, total employment on September 30, 2017 was 12,135, an increase of 3.0 per cent compared to September 30 of 2016.